Fortnightly Magazine - June 1 1997

Enron Corp. has acquiesced to a demand from the Oregon Public Utility Commission for $141 million in rate cuts as a condition to approval of the proposed merger between Enron and Portland General Corp.

The PUC staff had informed Enron in March that it would not approve the merger, based on Enron's proposed $61-million rate cut, and said it would only accept $141 million in guaranteed cost savings and rate cuts.

The trade-off is that shareholders of Portland General will receive less for their stock than Enron originally had offered.

The Pennsylvania Public Utility Commission has issued a set of guidelines for the development of "enforceable" tariffs that seek to limit a utility's liability to consumers for damages associated with the provision of utility services.

It directed the state's utilities to make sure that tariffs waiving liability are consistent with six principles:

1) Events covered lie within the commission's expertise and are subject to its ratemaking authority.

2) Limitations on liability may apply in case of interrupted service or property damage only and not personal injury.

Selling electricity is not like selling a pair of sneakers. Electricity is a product consumers can neither see, feel nor smell. Try it on? Go for a test drive? Not hardly. So how does an electric utility make its product appealing to consumers?

Some say it all comes down to price. A penny saved is a penny earned. But what about tenths of a penny? Do consumers know or even care what they pay for a kilowatt-hour? Just keeping the lights on seems enough for most.

Pennsylvania Administrative Law Judge Louis Cocheres has recommended that the Public Utility Commission should deny a request by PECO Energy Co. to recover stranded costs from ratepayers through a surcharge over 10 years.

Pennsylvania State Sen. Vincent Fumo (D) had intervened in the proceeding against PECO's request. Fumo claims the ruling is significant because it points out that customers should not receive the financial benefits of deregulation if PECO is allowed to impose the surcharge.

"Although the final decision is still in the hands of the commission ...

A Texas court has issued an interim order in the dispute between Central and South West Corp. and El Paso Electric Co. over their failed merger, ruling that Central and South West must pay El Paso a $25-million termination fee.

The proposed merger had been announced in 1993 and was terminated in 1995. Both companies had sued each other in a consolidated proceeding.

Chief Judge Larry Kelly of the U.S. Bankruptcy Court of the Western District also ruled that Central and South West may owe El Paso "interest-carry" costs alleged by El Paso at $18 million.

The Minnesota Public Utilities Commission has said it will postpone a decision for two months on whether to approve the proposed merger of Northern States Power Co. and Wisconsin Energy Corp. to form "Primergy."

The PUC may not decide the matter until as late as August. A sunset clause kicks in just three months after that time, which would allow the utilities to back out of the deal.

The Illinois Supreme Court has agreed to hear an appeal filed by Ogle County tax authorities regarding the valuation of Commonwealth Edison's Byron nuclear plant for the tax years 1989-1992, and whether certain plant assets were taxable as real property or exempt as personal property.

The appeal concerns a December 1996 ruling by an Illinois appeals court that effectively changed an assessment from real to personal property.

The National Coal Council has released the findings of a major new study on coal prepared at the request of former DOE Secretary Hazel O'Leary, which found that while the generation of electricity from coal has increased, emission of pollutants from coal has decreased.

A similar report was released in April, conducted by Mills-McCarthy & Associates, and sponsored by the Western Fuels Association, Inc., the National Mining Association, and the Center for Energy and Economic Development.

Strategic Energy Ltd. has premiered a "Virtual Utility," allowing electric consumers to shop nationwide for the best-priced power. Strategic Energy's control center will allow it to access real-time energy information and travel the grid to find available electricity.

"This is the beginning of the end of increasing electric rates for consumers nationwide," said Rick Zomnir, president of Strategic Energy Ltd.